Growthpoint withdraws bid

SEVEN months after its initial bid, Growthpoint Properties yesterday withdrew its offer for the assets of Fountainhead Property Trust, but said it would continue to engage regulators.

SEVEN months after its initial bid, Growthpoint Properties yesterday withdrew its offer for the assets of Fountainhead Property Trust, but said it would continue to engage regulators and major Fountainhead unitholders.

Last month, the JSE declined Growthpoint’s request for a ruling that Redefine Properties be precluded from voting on all resolutions relating to Growthpoint’s bid for its portfolio, worth more than R10bn.

Redefine and Growthpoint have been in a bidding war for Fountainhead’s assets since Growthpoint’s first bid last October, although Redefine withdrew its offer in March and acquired a 46% stake in Fountainhead to align its interests with Fountainhead unitholders. Redefine bought Fountainhead’s management company for R660m in August before opening talks on the trust’s assets.

Redefine’s significant unitholding — which would make it difficult for Growthpoint to win a unitholder vote to secure the assets — led the Fountainhead board’s independent committee to terminate its engagement with Growthpoint in March.

Growthpoint executive director Estienne de Klerk said yesterday that it would continue to engage a few of Fountainhead’s large shareholders, and would also pursue the matter with the Financial Services Board.

“And we are still talking to our legal advisers. It doesn’t mean that we can’t take other legal action albeit that from our point of view, the legal action should rather come from unitholders than from us because they suffered a R2bn loss.”

Growthpoint maintains that Fountainhead unitholders would have benefited from its significantly higher offer.

Mr de Klerk said Growthpoint was still interested in buying the assets.

“In order to get the board to engage we need to demonstrate to them that Redefine is out of the picture, or can’t vote their shares, and we have been struggling because the JSE have effectively said they can’t make a ruling.” Mr de Klerk said it was “incredibly frustrating” that the JSE — “a world class regulator” — had decided it could not rule on the matter. “We believe there has been some uncompetitive behaviour and that isn’t what should be happening in a welldeveloped, effectively first world financial market.”

Mr de Klerk said that “clearly it makes no sense to leave a cautionary out there forever on a deal that we think, at this stage, is certainly looking more difficult to do than not”.

Old Mutual Investment Group MacroSolutions senior portfolio manager Evan Robins said Growthpoint’s withdrawal of its offer was “inevitable”.

Since Redefine’s acquisition of a significant Fountainhead stake, and given that the JSE did not support Growthpoint’s request that Redefine be precluded from voting on all resolutions relating to its bid for Fountainhead, it “was a waste of time for them to continue”.

While the outcome of any legal proceedings was not certain, “if there’s no change in relation to voting, it’s going to be very hard for Growthpoint to do anything”, given Redefine’s voting rights, he said.

If Growthpoint “wants it badly enough”, it “could try do a deal with Redefine”. This would result in Redefine making a profit on its investment, but this scenario was unlikely.